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The Rise and Fall of GameStop

For decades, GameStop has been one of the primary places that gamers can go to buy new games. And, while the internet is full of jokes reminding everyone of how bad the GameStop values can be, it's also one of the only stores that gamers can trade in their games for credit towards a new one.

With the rise of digital marketplaces, however, GameStop has fallen on hard times. Lately, GameStop has faced all-time low share prices, and the online conversation has shifted from making fun of GameStop for bad trade-in values to questioning how much life it has left. But how did such a huge company wind up here?

It's important to understand that GameStop hasn't always been in such a dire situation. In fact, GameStop was valued at about $40 dollars per share as recently as October 2015, nearly ten times what the company's shares are worth as of this writing. While that wouldn't make it a goliath in the global retail marketplace, it did put it in the same ballpark as some other major retailers out there at the time. Of course, there have been other rough patches. The company was hit pretty hard by the recession in 2008, but that's to be expected from a retailer that exclusively sells wants in a time when many people can hardly afford needs. All that aside, GameStop's woes are much more recent than many people realize.

Related: GameStop Pre-Order Cancellations Explained

The current console generation brought with it a multitude of improvements - not just to hardware, either. The digital storefront aspect of both the Xbox One and the PlayStation 4 got much-needed facelifts, making it easier than ever to download video games from the comfort of one's home. Not only that, but internet speeds began to dramatically improve, making downloads much more feasible for those that wanted to play a game that evening, instead of the next day. This, obviously, has led to a shift in the games industry, one that places far more value in the digital marketplace than it does in the physical. This is, admittedly, better for the industry as a whole. It eliminates the cost of printing and distributing physical games, not to mention the cut retailers take from sales.

GameStop store

The cruel irony is that GameStop is forced to sell the machines that will be its inevitable demise to stay alive for just a little longer. Right now, next fall looks like the light at the end of the tunnel for GameStop, as the new generation of hardware should bring an influx of cash that the company can use to stay afloat. However, there's no telling how the digital marketplace will change once more, or how the rise of 5G internet speeds will go on to affect how people decide to purchase games. After all, if a game can be downloaded in 30 seconds rather than 3 hours, what's the point of going to the store in the first place? It's this digital mindset that led to Gamestop losing $673 Million in 2018 alone and will result in the company continually hemorrhaging money.

As anyone who has ventured into a GameStop in the past few years can admit, the company is trying to adapt. Where the shelves were once lined with new and used games, a heavier emphasis is now being put on collectibles, accessories, and apparel. These high-margin items are a good start for GameStop, especially considering the demand of items like Funko Pops, but it's done relatively little to stop the bleeding.

For example, GameStop was recently hit with layoffs affecting both GameStop and Game Informer, the magazine owned by GameStop. It's a troubling sign for the future of the company, though it was done in the name of cost-cutting and restructuring.

Related: New Last of Us 2 Gameplay Shown at GameStop Expo

GameStop has tried to find a buyer in the past but to no avail. The company is now looking to the future by generating a new store concept. This new concept would go beyond traditional retail, offering more of a community environment than it has in the past.

In a way, it would almost be like a locally owned shop, at least when compared to the structure of what one would typically from a major company with corporate infrastructure. It's a desperate attempt to cling to life by the company, and there's really no telling whether GameStops's new concept will succeed or not. Nevertheless, it doesn't seem likely that GameStop will be able to pull itself out of its rapid tailspin.

While many people anxiously await the demise of GameStop for some bizarre reason, it would have a profound ripple effect on the games industry as a whole. Millions of gamers still rely on GameStop to get their games, especially in rural areas with poor internet connections. Cut out that big of a market, and the effect it could have on the industry as a whole would have severe and lasting consequences. There would be fewer new IPs, crunch culture would worsen as consumer expectations increase but publishers have less money to spend on labor, and the production value of games would go down. It's easy to hate on a faceless corporation, but GameStop still fills a vital whole in the industry.

So, what's next? GameStop will eventually die. Maybe it will take 6 months, maybe it will take 6 years, but chances are it will happen, eventually. Reports are already saying GameStop is dying, and analysts are predicting when it will go out of business. If another recession were to hit, GameStop's odds of survival would be slim to none. For now, all gamers can do is wait and see what happens in the fallout of that closure.

More: New Survey May Be Bad News for GameStop's Future

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